US Tactical Allocation Fund

Asset Allocation – September 2017

PDF of Global Asset Class Returns click here

The S&P 500 is up 14.3% so far in 2017 after advancing 2.1% in September, the eleventh consecutive month the index has registered a positive return. Emerging markets equities remain the best performing asset class YTD up 28.1%. The technology sector is the top performer in the S&P 500 up an impressive 27.4% while energy and telecom are the only two sectors in the red down -6.6% and -4.7% respectively. The energy sector benefited from renewed hope surrounding the reflation trade in September, leading all sectors up nearly 10% for the month.  Small Cap energy, which we highlighted last month, surged 23% in September. In Canada, the Consumer Discretionary sector continued to be a market leader up over 17%.

S&P 500 Monthly Returns


The market backdrop is September was one of mean reversion.  The year’s best performing investment themes took a breather in favour of the areas of the market that have lagged. Small Caps led the way in the US up 7.7% in the month but are underperforming large caps  by 5.1% YTD. Value stocks rallied 3.8%, but lag growth stocks by 11.9% this year.

S&P 500 Value vs Growth 


Commodities are the only asset class in the red down -2.9%, but this is the result of energy and agriculture weighing on otherwise large moves in industrial (+16.8%) and precious metals (+8.7%). Specifically, Copper is up 16%, Gold 11% and Palladium up 38% YTD. The move in industrial metals confirms the advance seen in emerging market equities this year.

While much of the 8% move in the Canadian Dollar has been attributed to rising rates and a stronger economy, I find that reasoning hard to digest when the Euro is up 12%, and the British pound and Australian Dollar are up 8%. Almost every currency we track, with the exception of the Turkish Lira and the Argentine Peso has advanced this year vs the US Dollar. While the move in the Canadian Dollar has been impressive, it appears to be more a function of a weak US Dollar.


This document may contain certain forward-looking statements. These statements may relate to future events or future performance and reflect management’s current expectations. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Although the forward-looking statements are based upon what management believes to be reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Neither the Funds nor their respective managers assume any obligation to update or revise any forward-looking statement to reflect new events or circumstances. Actual results may differ materially from any forward-looking statement. Historical results and trends should not be taken as indicative of future operations. The Fund is not guaranteed, its value changes frequently and past performance may not be repeated. Unless otherwise indicated and except for returns for period less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data take into account distributions or dividends paid to unit holders but do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns.

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